In recent months, there has been much speculation about whether New York housing prices will drop as interest rates continue to rise. However, there are several factors that suggest this is unlikely.
The supply of housing in New York remains low, meaning there is more demand than supply. This is due to several factors, such as the scarcity of available land for development, strict regulations, and high demand for housing in the city.
According to a report by Zillow, the inventory of homes for sale in New York in May 2023 was 118,000 units, down 30% from the same month in 2022.
New York housing prices are still affordable for many buyers, even with higher interest rates. This is due to the fact that wages in the city are high and the cost of living is relatively low compared to other global cities.
According to a report by the United States Census Bureau, the median household income in New York in 2022 was $122,000.
Sellers in New York are not willing to lower prices, as they know there is a strong demand for housing. This is due to the fact that many sellers intend to stay in the city long-term and are not concerned about selling quickly.
According to a report by the National Association of Realtors (NAR), the percentage of sellers who were willing to lower the price of their home in May 2023 was 15%, down 20% from the same month in 2022.
What does this mean for buyers?
For buyers who are interested in buying a home in New York, the best strategy is to buy now. If they wait for interest rates to drop, they are likely to miss out on the opportunity to buy a home at a good price.
Why?
Once interest rates drop, sellers will receive more qualified buyers. This means that sellers will have more negotiating power and can raise prices.
Tips for smart buyers:
For smart buyers, there are some tips they can follow to maximize their chances of buying a home at a good price:
Negotiate closing costs. Closing costs can be a significant percentage of the purchase price of a home.
Refinance when interest rates drop. Once interest rates drop, buyers can refinance their mortgage to get a better interest rate.
Conclusion
It is unlikely that New York housing prices will drop in 2023 and 2024. Buyers who are interested in buying a home in the city should consider buying now. Once interest rates drop, buyers can refinance their mortgage to get a better interest rate.
Additional context
In 2020, during the COVID-19 pandemic, mortgage interest rates reached historic lows. This led to an increase in housing demand, as buyers sought to take advantage of the low rates. As a result, New York housing prices rose 16% that year.
In 2021, interest rates began to rise, but housing demand remained high. This was due to a number of factors, such as economic growth, immigration, and investor interest. As a result, New York housing prices rose 12% that year.